SOCAR reveals expectations regarding Moody's investment rating

Moody's International Rating Agency's upgrade of the State Oil Company of Azerbaijan (SOCAR) to an investment-grade by assigning Baa3 long-term issuer rating (stable) will allow the company to attract not only risk-seeking but also risk-averse investors, SOCAR told Report.

The company stated that this decision will confirm SOCAR's investment-grade rating status, improve access to liquidity by attracting more potential investors in both local and international capital markets during bond issuances, allow placement of securities at comparatively lower interest rates, and establish a reference point for future issuances with lower interest rate placement opportunities.

As noted by Moody's, SOCAR's sound financial indicators, strengthened transparency and accountability within the company, and the formation of improved corporate governance mechanisms are the main factors influencing the rating upgrade: "The sovereign upgrade reflects improvements in institutional effectiveness, proven through a lengthening track record of maintaining macroeconomic stability through recent shocks and oil price swings. Ongoing progress in regulatory reforms has enhanced banking sector stability, while continued commitment to reducing fiscal reliance on hydrocarbon revenues strengthens fiscal resilience. SOCAR also generated positive free cash flow (FCF) for the fourth year in a row, thanks to solid operating cash flow, moderate capital spending and modest shareholder distributions."

Moody's began collaboration with SOCAR on credit ratings in 2010, and the current Baa3 rating is the highest level achieved by SOCAR to date.